Tesco launches strategic review of U.S. chain

LONDON Dec 5 Britain's Tesco, the
world's No. 3 retailer, has launched a strategic review of its
loss-making United States chain Fresh & Easy that could lead to
a sale or closure of the business.

Announcing the review alongside a third quarter trading
update on Wednesday Tesco said it would report the results of
the review when it issues full-year results in April.

It said all options were under consideration for the
business and it has appointed Greenhill to assist in the review.

Tesco said it has had a number of approaches from parties
interested in acquiring either all or part of Fresh & Easy, or
in partnering with the firm.

It added that Tim Mason, Fresh & Easy's CEO, is leaving
Tesco after 30 years with the group.

The 200-stores Fresh & Easy chain, having absorbed nearly 1
billion pounds ($1.6 billion) of capital since its 2007 launch,
remains stubbornly loss-making in the cut-throat U.S. grocery
market and Tesco Chief Executive Phil Clarke has been under
increasing pressure from investors and analysts to
act.

Tesco also posted a return to falling quarterly underlying
sales in its home market on Wednesday, raising questions over
whether its 1 billion pounds recovery plan is struggling to gain
traction.

The firm, which takes about one in every 10 pounds spent in
British shops, said sales at UK stores open over a year,
excluding fuel and VAT sales tax, were down 0.6 percent in the
13 weeks to Nov. 24, its fiscal third quarter.